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Rent Control: The Hidden Truth

By: Onomo Ogbe

The Ontario government earlier this year removed rent control for new units while maintaining rent control for current tenants as part of a new housing supply action plan. In the past few years, many countries and jurisdictions (e.g. the United Kingdom, Germany, and four states in the United States of America) have enacted stringent policies on land use and building regulations. Policies like this make it harder to build additional housing units in many places, including Canada. The demand for housing is rising and so is the price because of the low supply of homes. Limiting the ability of landlords to charge market rent, leads to a withdraw of units from the market and conversions to higher valued units, like condominiums, which are not subject to rent controls.

Evidence from San Francisco The American Economic Review, led by Rebecca Diamond, wrote a report showing how rent control impacts tenants, landlords and the economy. Introducing rent controls caused:

· Reduced renter mobility by 20 percent while affected landlords reduced their rental housing supply by 15% and

· Landlords to shift resources to other real estate exempt from rent control.

Instead of addressing problems for tenants, rent controls combined with rising demand made the rental situation worse.

Payback of Ford’s new policy on rent control

Rent controls are motivated by the desire to assist the less privileged in what is believed to be a defective competitive market. However, they often make the situation worse. By eradicating rent control on new units, the Progressive Conservative government hopes to increase unit supply by incentivizing investors and encouraging developers to build.

Removal of rent control policies in Toronto is already having an impact. The recent rise in purpose-built rental housing entering the Toronto market demonstrates the flaws in the previous government’s rent control policies. High rental costs and housing scarcities are best fixed by building more homes, not by creating policies that restrict supply.

Existing tenants do benefit from rent controls, through lowering housing costs, but at the expense of the Landlords, society as a whole, new tenants, and those who wish to move. Rent controls allow tenants to stay at their current home virtually indefinitely without facing market increases in the house rent. In theory, this prevents Landlords from setting rents too high.

Why rent control policy is not the solution

Yet, rent control increases the quantity demanded for rent, while also decreasing the quantity supplied. In other words, it creates a shortage. Landlords also lose any incentive to improve their rental properties. Low-income individuals who are “lucky” enough to have a rent-controlled apartment are in effect sentencing themselves to a life of deteriorating amenities. Developers, as a result, have more reason to favour condominium development, due to higher possible returns, thus making it more difficult for tenants to move from their deteriorating units, as the supply is not available.

What will benefit renters?

Relaxing of rent controls would benefit renters. However, the existence of rent controls has so distorted the market that more actions are also required. Tax incentives to developers to build new rental apartments will help to increase the supply of rental units and make renting more affordable.

Tightening rent control or adopting new control will not make things better except for people renting in the short term. According to Mayor John Tory, affordable housing initiatives should precede any rent control changes. He said, “The housing affordability issue in Toronto is too serious to consider relaxing rent controls before increasing supply”. Yet, if we truly wish to improve conditions for renters, government needs to ease the restrictions on housing supply, so more homes get built.

A Progressive Country with an Archaic Electoral System, Is There a Need for Reform?

By: Shane Calderwood

The 2019 Canadian election is over, and the electoral map suggests Canadians are more divided than ever before. Western Canada voted overwhelmingly for Conservatives taking the entire provinces of Alberta and Saskatchewan, and Canadians also witnessed the resurrection of the Bloc Quebecois. Meanwhile, the Liberals won riding throughout Newfoundland and Labrador, Yukon and the Northwest Territories. Arguments arising from the election results include the lack of voter representation in Ottawa, the misrepresentation of the popular vote, and the rise of strategic voting. While Western Canada is giving rise to the conversation of a “Wexit” and Quebec sovereignty is mainstream political Canadian discourse again. All these trends underscore that the time for electoral reform is now, and Mixed Member Proportional Representation (MMP) is the optimal choice for Canada. MMP solves the issues related to voter participation, voter representation, and strategic voting.

Political Issues and Why It Matters

Voter participation is always an issue in the federal election, and the 2019 voter participation results were only 66% which is a drop from 68% in 2015. Various theories give way to why people don’t vote such as lack of trust in government and so on, but one of the major reasons is the idea that “my vote doesn’t matter.” This goes to the debate that the current system discourages voter participation.

Secondly, there is an argument for considering the popular vote results as a true reflection of what voters want and using the popular vote as means to form government could encourage greater voter participation as it would mean, “all votes do matter.” The results of the popular vote include Conservatives at 34%, the Liberals at 33%, the Bloc at 8%, NDP at 16% and the Green Party at 7% which is reflective of the minority government as no party could capture 50% of the popular vote, but alternatively, the distribution of seats in the House of Commons unfairly represents these results and in turn, fails to reward voter participation.

Lastly, the idea and argument of strategic voting, some voters are more inclined to vote for a party they think will keep another party from winning versus voting for the party they support which enables a two-party system in Canada. I can remember walking into the voting centre as a strong supporter of climate change, but when I cast my vote for the Green Party, I was thinking I should throw this in the garbage versus the ballot box as I knew my preferred choice has zero chance of winning my riding let alone the election. Thus, my ballot was worth as much as the piece of paper I used to cast it. There is a position that single plurality has been a means of compromise in Canada’s electoral system, and what has worked for years should not be changed. I argue a country as progressive as Canada ought to have an electoral system that is reflective of its core values which include diversity and inclusion.

From First Past the Post to Mixed Membered Proportional Representation The First Past the Post electoral system has been the preferred option since the conception of Canada. MMP could be used as tool to unite the country as it ensures all parties gain fair representation in the House of Commons and it forces them to work together to pass legislation whereby mediating the rising nature of divisive political discourse during a time where populism divide and the tyranny of majority erodes democracies.

Call to Action

In 2015, the Liberal Government made a platform promise to address electoral reform but would later walk back this promise suggesting there was a lack of consensus on the direction or available options. However, according to recent numbers released by the Angus Reid Poll (2019) over 68% of Canadians favour electoral reform, and another poll suggests 77% favour proportional representation. These stats are very reflective of the percentage of voter participation in the election as well which goes to the argument that the current federal government of Canada has a clear mandate to implement MMP as the optimal electoral reform option.

Evaluating the Election Projections

With the votes mostly counted and almost all seats decided, it is now possible to evaluate the election projections and predictions. For this analysis, I have used data from the CBC Canada Votes at 11:00 am on October 22, 2019.

This analysis will examine eleven poll aggregators, Four analysis-based projections, and three polling firm models. 338 CanadaCalculated PoliticsCanadian Election WatchCBC Poll Tracker, Lean Toss UpLISPOP, Too Close to all, Visualized Politics@EarlWashburn@repdonsman456, and @politikstcan each aggregate multiple polls from different polling firms to predict the election. Election Prediction Project and Teddy on Politics makes predictions using an analysis process, which examines data from the public alongside general trends. Teddy on Politics and @kylejhutton made similar ‘gut-based projections’ of the election. EkosForum, and Mainstreet are polling firms who use their data to model the election results.

Liberals won 157 seats. Overall, we can see that all the poll aggregators except for Lean Toss Up underestimated support for the Liberals. All the analysis-based projections also underestimated the Liberal support. However, two of three polling firms Ekos and Mainstreet overestimated support for the Liberals. Ekos was the closest to the Liberal projections missing by one seat at 158.

The Conservatives won 121 seats. Every poll aggregator projection, except for Lean Toss Up and @politicstacan, overestimated support for the Conservatives. All three polling firms underestimated Conservative support. Calculated Politics was the closest Conservative projection missing by one seat at 122.

The NDP won 24 seats. Every projection overestimated NDP support. Lean Toss Up and Mainstreet were the closest to the NDP at 25. The Bloc won 32 seats and every projection except for Ekos and Mainstreet estimated Bloc support. Calculated politics were closest to the Bloc at 34.

The Green party won three seats. Seven projections accurately projected this result. The People’s Party of Canada won zero seats. Seven projections accurately projected this result as well. One independent won, fifteen projections predicted this result.

To evaluate the overall accuracy of the different projections two methods are being used. First, the projection for each party is subtracted from the actual seats won. The absolute value is then taken (i.e. if it is negative it is turned positive) and these values are added together. The second method involves taking the Sum of Squares difference. This is done by subtracting the difference between projection and result and squaring this value then adding these together. This value is then divided by 7 (for the 7 projections) and then the square root is taken to show the average difference between each individual projection. The results of the two approaches are relatively similar.

Mainstreet was the most accurate projection by polling firm with Ekos close behind. Lean Toss Up was the most accurate poll aggregator, and third most accurate. The Elections Prediction Project was the most accurate analysis-based projection and fourth overall.

Part of the accuracy is determined as a result of the models the polling firms and aggregators use to project the election. Some of the differences in accuracy can also be attributed to how the polling aggregators model the polls of the election.

When comparing how the poll aggregators did at projecting the election Lean Toss Up once again was the most accurate only missing the actual results by an average of one percentage point. It should be noted that some of the poll aggregators did not share the projections for the PPC of Independents.

While individual models varied slightly in their performance. Overall, the aggregators, analysis-based projections, and polling firms should be satisfied with how they performed at projecting this election. All models predicted a minority government and most projected the Liberals would win the most seats.

*Updated at 1:00 pm to include the final Mainstreet seat projections